By Asif Aydinli
Leading Chinese electric vehicle manufacturer BYD is investing around $1 billion in the Turkish economy to build a plant with an annual capacity of 150,000 electric and hybrid vehicles. Turkey’s Minister of Industry and Technology Mehmet Fatih Kacir and BYD Chairman Wang Chuanfu signed the investment agreement.
The new plant, set to start operations by the end of 2026, will employ up to five thousand people. The plant will be located in the western province of Manisa and include a research and development center for sustainable mobility technologies.
Experts believe this move was made in response to Turkey’s introduction of 40% customs duties on Chinese-made internal combustion engine and hybrid vehicles. BYD announced plans to open a plant in Turkey to avoid export duties. This move is part of the company’s strategy, which also includes opening a plant in Thailand and considering the construction of a facility in Mexico.
The new plant will provide BYD with easier access to the European Union, with which Turkey has a customs union agreement. Recently, the EU imposed tariffs on the import of Chinese electric vehicles. From July 5, tariffs on Chinese-made electric vehicles will be in effect for at least four months, and if there are no compelling reasons to reconsider them by November, the tariffs will remain in place for the next five years. Individual tariffs will apply to three Chinese manufacturers: BYD (17.4%), Geely (19.9%), and SAIC (37.6%).
European officials justified the tariff increase by noting the rise in the market share of Chinese brands in the European electric vehicle market from 1% in 2019 to 8% this year, with a forecast of 15% by 2025. The average cost of Chinese electric vehicles is 20% lower than European ones.
European Commission spokesperson Eric Mamer stated that the purpose of the tariffs was to “correct the unfair situation” between manufacturers in China and Europe. He emphasized that the EU does not seek to impose tariffs but wants to address the imbalance between electric vehicle manufacturers in the EU and China.
China has called for consultations on this issue. Chinese Ministry of Commerce representative He Yadong expressed hope that the EU and China could reach a mutually acceptable solution.
According to the European Federation for Transport and Environment , in 2023, 19.5% of electric vehicles sold in Europe were made in China, and this share could rise to 25% in 2024. JATO Dynamics reports that the average retail price of Chinese-made electric vehicles in Germany is 29% lower than that of other manufacturers. China accounts for about 60% of the global electric vehicle market, according to SNE Research analysts.
The opening of a new plant in Turkey, along with a plant in Hungary , will strengthen the position of the Chinese auto industry in Europe. At the end of 2023, BYD announced plans to open a plant in the Hungarian city of Szeged. The first electric vehicles from this plant could roll off the assembly line as early as 2025, and the Turkish plant is expected to begin operations in 2026. These projects highlight BYD’s desire to be closer to major markets and protect against the threat of increased tariffs.
In addition to production facilities, BYD also plans to develop a research base in Europe, allowing the company to be at the forefront of electric vehicle innovation. The creation of a research center in Turkey will be an important step in this direction as the company strives to advance sustainable mobility technologies and improve product quality.
BYD’s investments in Turkey and Hungary will also significantly impact the local economies of these countries. Job creation and infrastructure development will benefit local communities and improve the overall standard of living in the regions where the plants will be located. Furthermore, the development of the automotive industry in these countries could attract additional investments and promote the growth of related industries.
In conclusion, BYD’s strategy to expand its presence in Europe through investments in Turkey and Hungary is multifaceted and takes into account both economic and political factors. The company aims not only to increase its market share but also to contribute to the development of sustainable mobility and innovations in the automotive industry. These steps by BYD could play a significant role in transforming the global automotive market and strengthening China’s position as a leading electric vehicle manufacturer.
BYD’s expansion in Europe also underscores the growing interdependence of global economies and the importance of international collaboration in the automotive sector. As countries like Turkey and Hungary become key players in the production and development of electric vehicles, they will play a critical role in shaping the future of the industry. This collaboration could lead to the exchange of technological expertise and best practices, further accelerating the advancement of electric vehicle technologies.
Moreover, BYD’s investments highlight the strategic importance of building a resilient supply chain network. By establishing manufacturing and research facilities in Europe, BYD is better positioned to mitigate risks associated with geopolitical tensions and trade disputes. This move ensures that the company can maintain a steady supply of vehicles to meet the growing demand in the European market, while also staying ahead of regulatory changes and tariff implementations.
Overall, the establishment of new plants and research centers by BYD in Turkey and Hungary represents a significant milestone in the global automotive landscape. It reflects the dynamic nature of the industry and the continuous efforts of companies to innovate and adapt to changing market conditions. As BYD continues to strengthen its presence in Europe, it sets a precedent for other manufacturers, encouraging them to explore new markets and forge strategic partnerships to drive the future of sustainable mobility.
